TaxTMI 
TaxTMI 
2025 (11) TMI 1384
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....eless Appeal Centre (hereinafter referred to as "NFAC"), Delhi all dated 27.03.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the "Act") all relating to Assessment Year (A.Y.) 2018-19. 2. At the outset, it was stated that the issue involved in all appeals was related arising on account of assessment framed in all the cases u/s.153C of the Act on the basis of a common alleged incriminating material found during search conducted on a third party. The incriminating material was a whatsapp chat extracted from the phone of one Mr. Vijay K. Manghrani, who was subjected to search action u/s. 132 of the Act, revealing the land sold by the assessee alongwith other co-owners to have a much higher fair market value as compared to that at which it was sold by the assessee's. The allegation of the department therefore being that the assesses had received on money in cash on sale of the said land, which had not been returned to tax. It was, therefore, contended that since issue involved in all the appeals was connected arising from a common incriminating material, therefore, all appeals be taken up together for hearing. Ld. DR fairly agreed with the same....
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.... 5) "The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal." 6. The brief facts relating to the case are that during the year under consideration, the appellant, along with five other co-owners, sold a land parcel measuring 9,611 sq. meters (Survey No. 241/1, TP Scheme No. 241, Nana Chiloda, Gandhinagar) to M/s Shivam Associates for a sale consideration of Rs. 1,65,00,000/- on 21.09.2017. During the course of search conducted on 15.10.2019, a WhatsApp chat dated 14.09.2018 on the mobile phone of Shri Vijay K. Manghrani, was found and seized. The chat was read as containing the prevailing market rate of land in TP Scheme No. 241 during F.Y. 2018-19 as Rs. 22,500 per sq. yard. The AO observed that appellant had sold land in the same TP Scheme in F.Y. 2017-18 at a documented rate of Rs 1,435.40 per sq yard. Based on this WhatsApp chat, the AO inferred that land within the same TP Scheme should have similar market rates and that the appellant's sale price was significantly undervalued. The AO stated that WhatsApp chat is strong evidence since its backup was taken in the presence of witnesses and a technical expert who certified....
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....ut in the case of M/s Shivam Associates wherein registered sale deed between the appellant and purchaser was found No incriminating material was found from the premise of the buyer, M/s Shivam Associates. There is even no statement of the buyer alleging or accepting that any extra amount has been paid in cash to the appellant or its co-owner. 6.4 It is observed that the sole basis of addition in the hands of the appellant relied upon by the AD is the WhatsApp chats found from the mobile phone of Shri Vijay Manghrani during the course of search The appellant has argued that the WhatsApp chat has been found from the phone of such person who is not related to the appellant and therefore, no reliance can be placed on the same in making addition in the hands of the appellant. It is also observed that the WhatsApp chat as relied upon by the AO is dated back to 14.09.2018 whereas the land was sold by the appellant on 21.09.2017 which is close to a year old. On perusal of relevant "whatsapp chat" referred by the AO wherein the appellant or buyer is not the party It is observed that the AO has though relied on such WhatsApp chat but has failed to bring on record any other tangible ....
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....is of which it can be said that the assessee has indulged in understatement of consideration for the sale of land in question. (ii) The AO did not have any documentary evidence, statement or any incriminating material showing understatement of consideration in respect of the land in question. (iii) The documents on which the AO has placed reliance, were belonging to a different person and not to the appellant or its transaction and do not relate to the period under consideration in which the appellant has sold the property and that no nexus between that person and the assessee has been established beyond doubt. Further, the AO has resorted to estimation of excess consideration, itself, would show that the AO did not have any evidence that any cash was exchanged for the land in question. The AO has assumed that there must have been exchange of unaccounted cash. The law does not permit any assumption of understatement of amount, rather it requires the AO to exactly point out the precise amount received. The AO is not only required to prove understatement of sale price, but also to show precise extent of the understatement. The AO has not brought on record a....
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....he sale deed. Details of buyers or sellers of these Immovable properties, as the case may be, were already on record before the ld. AO and the ld. AO had all the powers to make enquiry under the Act from such sellers and buyers, the AO for the reasons best known to him did not make any such enquiry. Thus, the onus on the department to prove that investment was made by Assessee or sale consideration received by the Assessee, as the case may be was in fact more than that depicted in the sale deed did not get discharged at all. CIT (A) has rightly held that ld. AO cannot substitute the apparent consideration mentioned in the sale deed so as to adopt the market value without bringing any material on record to show that consideration disclosed in the sale deed is in excess of the value adopted by the assessee - AO cannot simply make additions on the basis of fair market value of the property. The grounds raised by revenue dismissed." 6.7 It is relevant to refer to decision of Hon'ble Gujarat High Court in the case of Commissioner of Income-tax v. Fairdeal Textile Park (P.) Ltd vide TAX APPEAL NOS. 1051, 1052 & 1057 OF 2013 wherein it was held as under: "Se....
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....uire those properties. Upon perusal of the same, Ld. AO observed that there was variation in the values of 4 properties. The aggregate purchase consideration was Rs 33 51 Crores as against aggregate value of Rs.50 Crores as captured in the image. The assessee, in reply to question nos. 99 stated that the price mentioned in the mobile phone was offer price. After negotiations, the prices were finalized as per sale deed. It was usual practice for the assessee to enquire through broker. The assessee would note down the negotiated prices in mobile notes. Subsequently, the price would be negotiated by offering payment in single tranche. The prices on the mobile notes would not have been updated. The same is supported by the fact that the image as captured from Samsung phone was a non-editable one and the same could not be updated by the assessee. On these facts, it could thus be seen that the assessee offered a reasonable/plausible explanation for the same. 5. However, Ld. AO continued to allege that there were contradictions in the two statements and the prices recorded in mobile notes were actual consideration paid by the assessee. It is another vital fact that during assessm....
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....obile phone only and the same was merely on the basis of presumption and therefore, such an addition could not be sustained in law. In our considered opinion, the issue has been clinched in correct perspective by Ld. CIT(A) and the same has been adjudicated in accordance with settled legal principles. In our view, once initial onus was discharged by the assessee by furnishing plausible explanation coupled with the confirmations from respective sellers, the onus had shifted on Ld. AD to dislodge the same. However, we find that the there is no concrete material to dislodge the claim of the assessee. Therefore, we find no reason to interfere in the impugned order. The additions, for all the years, have rightly been deleted by Ld. CIT(A). 7. All the appeals stand dismissed." 6.9 In view of above facts, relying upon decisions referred supra, it is observed that addition for on-money receipt is based on presumption and relying on whatsapp chat which was not pertaining to year under consideration and more particularly, it is subsequent to sale transactions carried out by the appellant along with other co-owners. Considering the facts discussed herein above, addition made....
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....T(A) has found the addition made to be based on mere presumptions while deleting the addition and has noted the following pertinent facts for arriving at this finding: ● The said message is exchanged almost a year after the actual transaction of sale of the said land. ● There is no connection found to have been established by the Revenue between the assessee and Mr. Manghrani leave alone any connection with the land sold by the assessee. Mr Manghrani was never investigated or questioned about the said whatapp message. He was not asked a single question relating to the said message during his statement recorded during search conducted on him. ● No effort / attempt was made by the Revenue to corroborate the interpretation of the message, as revealing the fair value of land sold, by doing any ground work and coming up with actual comparable instances supporting the rate mentioned in the chat. ● The purchaser of the said land, M/s Shivam Builders, was also noted to have been subjected to search action u/s.132 of the Act and no incriminating material vis-à-vis the purchase of impugned land was found from him. No addition....